Reliance Industries spins off O2C business

MOSCOW (MRC) -- Reliance Industries Ltd has completed spin-off of the firm’s oil-to-chemical business into a new unit that will help it pursue growth opportunities with strategic partnerships, reported Kemicalinfo with reference to the company's statement.

The oil-to-chemical (O2C) business unit holds Reliance’s oil refinery and petrochemical assets and retail fuel business but not upstream oil and gas producing fields such as KG-D6 and textiles business.

“Reorganising refining and petrochemicals as oil-to-chemicals (O2C) reflects new strategy as well as management matrix,” the company said in a post earning investor presentation.

Reliance started work on hiving off the O2C business into a separate unit last year for a possible stake sale to companies such as Saudi Aramco.

It values the O2C business at USD75 billion and has been in talks with Saudi Arabian Oil Co (Aramco) for sale of a 20% interest.

The company, however, did not mention discussions with Aramco, which are said to have hit a valuation roadblock.

The reorganisation would “drive the move towards further downstream and closer to customers” and “provide sustainable and affordable energy and materials solutions to meet India’s growing needs,” the firm said in the presentation.

Reliance O2C Limited houses oil refining and petrochemical plants and manufacturing assets, bulk and wholesale fuel marketing, and Reliance’s 51% interest in retail fuel joint venture with BP of the UK.

The O2C unit also houses the firm’s Singapore and the UK-based oil trading subsidiaries and marketing subsidiary, Reliance Industries Uruguay Petroquimica SA.

It also houses Reliance Ethane Pipeline Limited that operates a pipeline between Dahej in Gujarat and Nagothane in Maharashtra as well as 74.9% stake that Reliance holds in the joint venture with Sibur.

Its very large ethane carriers, gas pipelines such as one that transports coal-bed methane from its CBM blocks, overseas oil and gas asset holding company Reliance Industries (Middle East) DMCC, and domestic exploration and production assets would not form part of the O2C unit.

Ambani had in July 2019 stated that the process of spinning of O2C into a separate subsidiary would be completed by early 2021.

Reliance owns and operates twin oil refineries at Jamnagar in Gujarat, with a combined capacity of 68.2 million tonnes per annum.

The company holds a 66.6% stake in the KG-D6 block where it is investing about USD5 billion in developing a second set of gas discoveries along with BP. It also has a similar stake in the NEC-25 block in the Bay of Bengal and operates two CBM blocks in Madhya Pradesh. These upstream assets are not part of the O2C unit.

“Reliance O2C (is) one of the most integrated manufacturers of value-added fuels, chemicals and materials,” the presentation said. “O2C to maximize downstream, reduce transportation fuels and create clean and green energy platforms.

Reliance for the first time reported integrated earnings of the O2C business in its third quarter financial results. Previously, refining and petrochemical businesses were reported separately while fuel retailing revenue was part of the firm’s overall retail business.

In the October-December 2020 earnings statement, refining and petrochemical as well as fuel retailing businesses earnings were reported as one. As a result, it did not give refining margins – the most sought after number to assess the firm’s oil refining business.

The company’s EBIDTA grew 10.35% to Rs 9,756 crores (USD1.33 billion) for the period ended December 31, 2020 as against EBIDTA of Rs 8,841 crores (USD1.2 billion) for the previous quarter.

Net sales saw an increase of 10.05% to Rs 83,838 crores (USD11.49 biilion) for the period ended December 31, 2020 as against net sales of Rs 76,184 crores (USD10.44 biilion) during the previous quarter.

As MRC informed earlier, in September 2020, RIL released a detailed plan to carve out its oil-to-chemicals business into a separate entity for a potential stake sale. As per the scheme, RIL’s O2C assets, including its refining, petrochemicals, fuel retail (majority interest only) and bulk wholesale marketing businesses, along with its assets and liabilities, will be transferred to a new unit. The new unit will include the refining and petrochemical plants and manufacturing assets at RIL’s Jamnagar, Dahej, Hazira, Nagothane, Vadodara, Patalganga, Silvassa, Barabanki and Hosiarpur locations.

It will also include all assets relating to RIL’s ongoing refinery and petrochemical projects that are being commissioned or near completion, the company said. RIL had officially announced its proposal to transfer its oil-to-chemicals (O2C) business to a separate entity in April.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's DataScope report, PE imports to Russia decreased in January-November 2020 by 17% year on year and reached 569,900 tonnes. High density polyethylene (HDPE) accounted for the greatest reduction in imports. At the same time, PP imports into Russia increased by 21% year on year to about 202,000 tonnes in the first eleven months of 2020. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.

Reliance Industries is one of the world's largest producers of polymers. Thus, the company produces among others polypropylene, polyethylene and polyvinyl chloride.
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1. Lotte Chemical plans to acquire JSR elastomers business

MOSCOW (MRC) -- Lotte Chemical has recently completed its due diligence on potential acquisition of JSR’s elastomers business, according to Chemweek with reference to a local press report from Business Korea. Lotte Chemical has selected Nomura Securities as its lead manager for the acquisition, says the report. JSR’s elastomers unit produces emulsion styrene-butadiene rubber (E-SBR), solution styrene-butadiene rubber (S-SBR), polybutadiene rubber, and isoprene rubber. IHS Markit data says that JSR is the largest producer of SBR in Japan, accounting for a combined capacity of 210,000 metric tons. Lotte Chemical established a joint venture (JV) with Versalis (Milan), the chemicals arm of Eni (Rome), and has been operating 100,000-metric tons/year S-SBR facilities for high-performance tires since 2017.




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MOSCOW (MRC) -- Baker Hughes announced an order with Petrobras to provide a suite of digital solutions across Petrobras sites in Brazil, said Hydrocarbonprocessing.

The order, booked in the fourth quarter 2020, will further expand Petrobras’ digital capabilities following a third quarter 2020 order for a three-year frame agreement across multiple Baker Hughes Digital Solutions product lines. Baker Hughes will support Petrobras’ thermal plants; refineries; gas treatment units; production plants; offshore platforms; and floating production, storage and offloading units (FPSO) with its technologies, ensuring the latest regulatory requirements are achieved. The order includes flare monitoring and calibration technologies, cybersecurity and remote monitoring services, and interconnected machinery protection systems and sensors.

"Through our integrated suite of technologies, we can leverage data and the power of our software and hardware systems to significantly advance Petrobras’ digital transformation journey,” said Rami Qasem, executive vice president of Digital Solutions at Baker Hughes. “In addition, our deep domain expertise in industrial asset management will support Petrobras with reducing risks and emissions while maintaining safer operations."

Baker Hughes technologies use real-time analytics to help customers improve machinery health, eliminate unplanned outages, reduce downtime, and avoid catastrophic failures. Petrobras will benefit from several capabilities across Digital Solutions product lines, including: Bently Nevada's latest generation Orbit 60 system, System 1 software licenses, and remote monitoring services for advanced industrial asset management.

Panametrics’ Flare.IQ advanced flare gas monitoring and optimization system, and FlareCare services and parts for reduced carbon and methane emissions. Nexus Controls’ distributed control systems, cybersecurity services and human-machine interface (HMI) upgrades for safer and more reliable operations.

As MRC informed earlier, private equity firm SK Capital Partners has closed the acquisition from Baker Hughes of its specialty polymers business and renamed it NuCera Solutions. The acquisition was first announced in July 2020.

As MRC informed earlier, SK Global Chemical (SKGC), one of the largest producers of petrochemical products in South Korea, plans to permanently close cracking unit No. 1 in Ulsan (Ulsan, South Korea) on December 8 this year.
According to a letter from the company to its customers, production at this 190,000 tonnes of ethylene and 135,000 tonnes of propylene per year will be halted due to unfavorable market conditions. However, SKGC will continue to supply ethylene to its domestic customers from other crackers.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's DataScope report, PE imports to Russia decreased in January-November 2020 by 17% year on year and reached 569,900 tonnes. High density polyethylene (HDPE) accounted for the greatest reduction in imports. At the same time, PP imports into Russia increased by 21% year on year to about 202,000 tonnes in the first eleven months of 2020. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.

MRC

MOSCOW (MRC) -- Crude oil futures fell during the mid-morning trade in Asia Jan. 22, as pandemic concerns heightened amid a lack of new drivers, reported S&P Global.

At 10:43 am Singapore time (0243 GMT), the ICE Brent March contract was down 58 cents/b (1.03%) from the Jan. 21 settle to USD55.51/b, while the March NYMEX light sweet crude contract was down 60 cents/b (1.13%) to USD52.53/b. The Brent marker had risen 0.04% to settle at USD56.10/b on Jan. 21, with the NYMEX light sweet crude marker falling 0.34% to USD53.13/b.

After the commotion of US President Joe Biden's inauguration subsided, the escalation of the pandemic once again became the focal point of the market's attention. The UK suffered its worst day of the pandemic in the week of Jan. 17, when the country registered more than 1,800 deaths, while fresh outbreak in multiple Chinese cities also sparked fears that the country could experience another debilitating wave.

Chinese authorities have already imposed mobility restrictions in affected cities, and have called on citizens to refrain from any travel during the upcoming Lunar New Year holidays.

With oil demand from the pandemic-stricken western hemisphere already weak, market analysts fear that tougher and longer lockdowns in China could further exacerbate the situation, and send prices falling.

"The news that China is restricting travel ahead of the Chinese New Year holiday underscores the severity of the recent uptick in infection numbers and concerns about oil demand in the world's second-biggest consumer," said Stephen Innes, chief global market strategist at AXI in a Jan. 22 note. "The spread of [the coronavirus] in China is the most significant demand-side risk in Q1," Innes added.

Meanwhile, the market continued to ruminate over the impact that the Biden administration will have on the oil market. While analysts agreed that the administration's focus on pushing through additional stimulus measures and on containing the pandemic bodes well for oil demand in the near-term, there remained consternation over the administration's green legislative agenda.

"The US oil industry is also bracing itself for a period of upheaval following the inauguration of Joe Biden as President," said ANZ analysts in a Jan. 22 note.

"One of his first moves was to block the Keystone pipeline project. Biden has also said he will look to limit the drilling activity on federal land and waters, possible hindering US shale's growth," they said.

As MRC informed previously, oil producers face an unprecedented challenge to balance supply and demand as factors including the pace and response to COVID-19 vaccines cloud the outlook, according to an official with International Energy Agency's (IEA) statement.

We remind that the COVID-19 outbreak has led to an unprecedented decline in demand affecting all sections of the Russian economy, which has impacted the demand for petrochemicals in the short-term. However, the pandemic triggered an increase in the demand for polymers in food packaging, and cleaning and hygiene products, according to GlobalData, a leading data and analytics company. With Russian petrochemical companies having the advantage of access to low-cost feedstock, and proximity to demand-rich Asian (primarily China) and European markets for the supply of petrochemical products, these companies appear to be well-positioned to derive full benefits from an improving market environment and global economy post-COVID-19, says GlobalData.

We also remind that in December 2020, Sibur, Gazprom Neft, and Uzbekneftegaz agreed to cooperate on potential investments in Uzbekistan including a major expansion of Uzbekneftegaz’s existing Shurtan Gas Chemical Complex (SGCC) and the proposed construction of a new gas chemicals facility. The signed cooperation agreement for the projects includes “the creation of a gas chemical complex using methanol-to-olefins (MTO) technology, and the expansion of the production capacity of the Shurtan Gas Chemical Complex”.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's DataScope report, PE imports to Russia decreased in January-November 2020 by 17% year on year and reached 569,900 tonnes. High density polyethylene (HDPE) accounted for the greatest reduction in imports. At the same time, PP imports into Russia increased by 21% year on year to about 202,000 tonnes in the first eleven months of 2020. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.
MRC

MOSCOW (MRC) -- Merck KGaA says it has acquired AmpTec (Hamburg, Germany), a messenger RNA (mRNA) contract development and manufacturing organization (CDMO), according to Chemweek.

The deal strengthens Merck’s capabilities to develop and manufacture mRNA for its customers, for use in vaccines, treatments, and diagnostics applicable in COVID-19 and many other diseases, the company says. Financial terms have not been disclosed.

“The success of mRNA-based vaccines for COVID-19 lays the path to accelerate the development of these therapeutics for many other diseases,” says Stefan Oschmann, chairman and CEO of Merck. “This transaction is another important step to support the constant growth of our life-science business through tailored small-scale acquisitions with high impact.”

AmpTec uses a “differentiated PCR-based technology for mRNA manufacturing,” Merck says. PCR is an important component of mRNA manufacturing and lipids, which form part of Merck’s life-science portfolio and constitute another critical component for the formulation of mRNA therapeutics including COVID-19 vaccines, the company says.

“By combining AmpTec’s PCR-based mRNA technology with Merck’s extensive expertise in lipids manufacturing, we are able to provide a truly differentiated and integrated offering across the mRNA value chain, which will significantly decrease supply-chain complexity and enhance speed-to-market,” says Oschmann.

AmpTec also has a diagnostics business that focuses on producing customized long RNAs and DNAs for in vitro diagnostics, which will complement Merck’s diagnostics business, the company says.

Merck says it continues to invest in mRNA as a modality and will scale up this technology at AmpTec’s Hamburg site and at Merck’s headquarters at Darmstadt, Germany.

As MRC wrote previously, Merck KGaA has announced the opening its M Lab Collaboration Center in Shanghai, China. Merck Innovation Hub, the first in China, started in late 2019, with the company announcing a 100 million renminbi (USD14 million) seed fund injected into the China Innovation Hub.

Besides, Merck KGaA said in August, 2020, it plans to build an EUR18-million (USD20.6 million) laboratory facility at Buchs, Switzerland, to support its rapidly growing reference materials business. The facility will include laboratory and office space in a three-story, 1,125-square-meter building, Merck says. Completion of construction is scheduled for December 2021 and the move to the facility is planned for early 2022, the company says. Merck anticipates that about two dozen jobs will be created.

We remind that Russia's output of chemical products rose in November 2020 by 9.5% year on year. At the same time, production of basic chemicals increased in the first eleven months of 2020 by 6.6% year on year. According to the Federal State Statistics Service of the Russian Federation, polymers in primary form accounted for the greatest increase in the January-November 2020 output. November production of polymers in primary form rose to 896,000 tonnes from 852,000 tonnes in October. Overall output of polymers in primary form totalled 9,240,000 tonnes over the stated period, up by 17.1% year on year.

Headquartered in Darmstadt, Germany, Merck opened an OLED application center in Pyeongtaek, Korea, in 2015. Merck Korea now has 11 operation sites and some 1,200 employees and operates businesses in functional materials, health care and life sciences. The functional materials business encompasses advance materials for information technology products such as displays and semiconductors. It also includes cosmetics and paints for automobiles.
Its health care business involves pharmaceuticals and medical devices for treatments of cancer, multiple sclerosis and infertility. The life sciences business deals in an extensive portfolio of over 300,000 products used for protein research, cell biology, antibodies, water purification and microbiome tests.
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